The net present value method assumes that the project's cash flows are reinvested at the:
A) internal rate of return.
B) the simple rate of return.
C) the discount rate used in the net present value calculation.
D) the payback rate of return.

Question

Quizplus · Accepted Answer

The net present value method discounts future cash flows to their present value using the discount rate. Therefore, it assumes that the cash flows are reinvested at the same rate as the discount rate used in the calculation.

The Net Present Value Method Assumes That the Project's Cash